Singapore telcos – no more same boring story

The Singapore telco space could be due for a shake up as market leader SingTel paves the way for a new pricing bundle. There could soon be a fourth telco challenging the incumbents and a stronger pay TV contender in the pipeline.

Singapore, Marina Bay Sands
Source: Bloomberg

The Singapore telco space could be due for a shake up as market leader SingTel paves the way for a new pricing bundle.

There could soon be a fourth telco challenging the incumbents and a stronger pay TV contender in the pipeline.

Telco stocks have long been a market favourite for investors due to their relatively defensive qualities and dividends. However, their rising stock prices have recently made their yields slightly less attractive.

The sector’s latest earnings in the June quarter were a bit of a mix in the bag, all three telcos delivered below market expectations. StarHub and SingTel both reported lower earnings, and M1 managed to improve from last year despite lower sales.


June Quarter
Net Profit

YoY % change

June Quarter

YoY % change











M1 $43.9m 12.1% $240m -2%


Pressure on mobile ARPUs

One factor weighing down the sector’s bottom line has been the erosion of average revenue per user (ARPU), as customers increasingly favour Internet-based apps for messaging and voice calls. Over the past year, this has particularly weighed down StarHub and SingTel, which reflected in their more muted outlooks.

In the quarter ended June, SingTel’s domestic postpaid ARPU continued on a downward trend, falling by $3 to $76. It blamed this on the lower interconnect SMS charges and roaming usage and mobile share plans.

StarHub saw similar pressure in postpaid mobile, where ARPU dropped by $4 to $68 over the same period, which it attributed to the rollout of SharePlus, secondary line plan. 

M1 managed to escape with a flat ARPU at $62.3.

The bright spot for the sector is that with rising 4G adoptions from smartphone users, telcos will be able to push more customers onto tiered pricing plans and hopefully see improvements in their margins.

Unlocking more revenue by locking in users

In the meantime, the three telcos have been pushing initiatives to retain users and increase their margins.

An interesting development from SingTel could progress into a long-term competitive advantage and an ARPU boost.  In August, the telco launched new mobile subscription plans, which comes bundled with access to Wi-Fi hotspots across the island.

These allow users to switch to a Wi-Fi network and avoid draining their monthly data allowance. Besides improving data coverage, Wi-Fi offloading will also relieve strains on its network capacity amid the boom in mobile data consumption.

This leveraging of Wi-Fi hotspots is something rivals may currently find hard to match on the same scale, due to SingTel’s dominance in the network infrastructure. The telco currently has around 100 hotspots in about 15 locations, including in major shopping malls. SingTel is targeting to have over 1,000 hotspots by next March and more than 1,700 by March 2016.

There’s no surprise that these plans will be more expensive –  about $3 more. However, if customers take to it in a big way, we could see a lift in ARPU in the long run.

New contender in pay TV

For the smallest player M1, a nice upside surprise could be in the pipeline thanks to the progress in its MiBox pay TV offering. It could soon cross-carry English Premier League broadcasts.

During its July earnings call, M1 revealed that its pay TV customer base recently hit the milestone of 10,000 subscribers. This is the pre-requisite to be a receiver of cross-carriage content such as exclusive programming by other operators. Regulatory approval is pending, but we could eventually start to see M1 become a more aggressive pay TV competitor and offer more value-add bundles for its subscribers.

Intensifying broadband competition

The bright spot for StarHub has also been the traction in its ‘hubbing’ packages, where users subscribe to a bundle of pay TV, mobile and broadband services. In the quarter ended June, StarHub saw a 7% increase to 234,000, households subscribing to three services.

The ratio of households with more than one StarHub service also rose from 57% to 59%. These numbers reflect a higher lock in rate of customers, which will contribute to stronger market share and revenue.

However, it has been under pressure on the residential broadband front, where overall revenue dropped 17.2% in the latest quarter. New players such as MyRepublic and Viewqwest have put pressure on prices and margins.

We could start to see some let up in price competition though, as the discounts may be unsustainable for the smaller players as they will incur more capital expenditure to grow. This will be good news for incumbents who will be able to see a rebound in broadband margins in the medium term.

More competition for telcos?

What to watch out for will be the potential disruption from a fourth telco. After making waves in the broadband industry, the two-year-old Internet provider MyRepubilc is aiming to be the country’s next mobile operator.

In what will be good news for consumers, MyRepublic has plans to offer unlimited data bundles, which have been phased out in Singapore. If all goes to plan, the incumbents will be motivated to react with more innovative price plans and offerings.


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